Canadian Securities Exchange expands global reach with National Stock Exchange of Australia acquisition

The rapidly growing Canadian Securities Exchange (CSE) will expand its global reach and operational stability when it acquires the National Stock Exchange of Australia (NSXA) later this year in an all-cash transaction.

NSXA owner NSX (ASX: NSX) has structured the deal through a scheme of arrangement with CSE market operator CNSX Markets, which currently holds 24.4 million shares (or 4.85% equity) in NSX.

Under the terms, CSE will acquire the remaining 95.2% of NSX stock that it does not already own at a cash price of A$0.035 per fully paid ordinary share and A$0.00035 for each partly paid share.

Similar focus

The deal will see CSE expand its geographic footprint by partnering with an exchange that has a similar focus on early-stage, entrepreneurial companies with strengths in the resources sector.

NSXA expects the acquisition to enhance its capital formation and liquidity offerings for emerging companies in Australia and other markets.

NSXA will continue to be operated by a local management team with deep expertise in the exchange space and additional support provided by CSE.

‘Natural next step’

The board of NSX has unanimously recommended that shareholders vote in favour of the deal, with non-executive chair Tim Hart adding that it was a “natural step” for the exchange.

“CSE’s own journey is consistent with our strategy and we believe this development enables the natural next step in the evolution of Australia’s capital markets and NSX’s growth,” he said.

“This transaction will boost Australia’s market competitiveness and expand the range of opportunities for companies seeking capital to grow and investors looking for diversity to build wealth.”

Competitive force

NSXA chief executive officer Max Cunningham said the acquisition would position the exchange to replicate CSE’s success and become a competitive force in Australian capital formation.

“The Canadian experience demonstrates that one exchange size does not fit all and we believe Australian issuers and investors are keen to see a dynamic alternative to the larger, legacy incumbent,” he said.

“A stronger balance sheet will expand our product offering, sharpen our customer focus and provide Australian companies, brokers and investors with liquid, reliable and well-regulated services.”

He said NSXA supported a “strong, accountable and transparent” regulatory environment underpinned by rules rather than “opaque, precedent-based decision-making” around waivers and other governance matters.

Rebuilding the NSX

The journey of rebuilding the NSX as a credible alternative listing venue began 12 months ago.

“This has resulted in renewed focus on an appropriate listings framework for small and emerging companies, as well as a revision of current listing rules and a new team with extensive local and global exchange experience,” Mr Cunningham said.

“We expect CSE will build on those foundations and offer shared services in key areas such as technology and financial resources.”

Global listings

CSE chief executive officer Richard Carleton said the NSX acquisition would expand CSE’s reach and build on its success in attracting global listings.

“Over the past 21 years, CSE has grown to more than 750 listings by focusing on and supporting entrepreneurial companies and we believe the NSXA is poised to execute a similar plan in Australia,” he said.

“Both countries have highly developed capital markets with unique infrastructures that support pre-revenue companies in public markets and we look forward to creating a collaborative environment where both exchanges can investigate inter-listing solutions for their clients.”